Encouraging Partnership Between Crypto Firms and Banks, Suggests American Bankers Association.
The American Bankers Association (ABA) has released a new report suggesting that banks should consider partnerships with crypto companies based on and dependence on the profitability of the sector and seeing client interest. This 20-page report that has been released previously provides a complete overview of the crypto, like mapping crypto business operations glossary for various banking products and services. ABA further prescribes crypto usage cases to banks that control revenue models and issues related to each utility case.
The report further classified the crypto assets into four major categories: cryptocurrencies, stable coins, central bank digital currencies, and non-fungible tokens. Decentralized finance (DeFi) is also mentioned in the list.
The report provides insight into the submission or sale of crypto, money transmission, and tax reporting. While the offer or sale of cryptocurrency is regulated by the SEC, if the offer or sale is secured by state or federal law, or if it is treated as a cash transfer under state law, or if the person is trading money services under federal law for money transmission, to FinCEN Money Services Business (MSB) And the report further describes how states are required to register for Money Transmitter Licenses (MTL).
While concerning the tax reporting issues, it is mentioned that the IRS will be treating cryptocurrency as a property asset.
Despite being a 20-page long report, there were comments on having a lack of clarity about the regulation of cryptocurrency.
“However, the indefinite control of many crypto assets and the invention of business models can often create ambiguous or diverse requirements that can create significant gaps in regulation and monitoring.” Although Acting Controller Michael Hsu said he would redefine the comment, readers reviewed the FDIC request for information and the OCC commentary on cryptocurrencies.
Regarding the bank’s engagement with digital assets, the report says, “Banks are looking for opportunities for their clients to acquire these assets through their banking affiliation. Consumer interest in making crypto products available to banks. Citing a survey conducted by the conservation organization NYDIG, which suggested that 80% of the current Bitcoin holders prefer moving their assets to banks.
“With the growing profitability of the crypto industry, it is becoming more profitable for banks to accept crypto companies as partners and their customers, while cryptocurrencies need to provide access to on-board and offload fiat deposits, as well as the blockchain payment system.” More secure loan processes are allowed. Other activities that will be included are KYC / AML, digital identification, reporting, and banking, where the bank provides business banking services to crypto companies.